Singapore companies are facing broad cost and demand pressures stemming from the Middle East conflict, with about two-thirds of firms reporting moderate to severe impact on their operations, according to a new survey by the Singapore Business Federation (SBF). The poll identifies higher energy and logistics costs, together with softer customer demand, as the main channels through which businesses are being affected.
SBF’s findings show that the conflict is feeding into multiple components of the cost base. Around 66% of respondents cited higher energy prices as a key pressure point, 54% reported increased shipping and freight costs, and 48% noted weaker demand from customers. The level of disruption varies by firm size. About half of larger companies characterised the impact as moderate, while roughly one in three small and midsize enterprises (SMEs) described the effect as significant to severe. Risk exposures also differ across segments. Larger firms more often reported increased spending on insurance and security, with 42% indicating higher outlays in these areas, compared with 17% of SMEs. This suggests that big corporates may be more likely to purchase formal risk-transfer and protection solutions, while smaller firms could be relying more on internal measures or remaining underinsured.
Sentiment indicators reflect a similar divide. SBF reported that 78% of large firms expressed confidence in managing ongoing volatility, versus only 36% of SMEs. Across all respondents, 54% said they were very or extremely concerned about their long-term viability if current conditions extend beyond the next six months. That points to elevated credit and continuity risk, particularly in the SME segment that forms a substantial portion of many insurers’ commercial portfolios.
“Our latest poll shows a growing confidence gap between SMEs and larger firms. While bigger companies are better able to manage rising costs, SMEs are feeling the strain more acutely amid ongoing energy and logistics volatility. Businesses are tightening costs and managing risks through supply chain diversification and currency hedging. Businesses welcomed the higher CIT rebate but are also calling for working capital support and help with logistics cost. SBF will continue working with the government to keep support measures targeted and effective,” SBF CEO Kok Ping Soon said.
In response to the changing cost environment, about half of surveyed firms have revised commercial arrangements, either by raising prices or renegotiating contracts with customers and suppliers. SMEs are focusing on liquidity. SBF said 40% of smaller firms are prioritising cash preservation, including stricter control of operating expenses and delaying discretionary spending. This focus on liquidity may signal both heightened vulnerability to cash-flow shocks and increased sensitivity to insurance pricing and terms. Larger companies are more likely to employ financial risk-management instruments and capital investment as part of their response. According to SBF, one-third of these firms are using fuel or foreign-exchange hedging, and 17% are increasing investments related to energy efficiency. These actions intersect with demand for more specialised covers and advisory services around commodity price, currency, and operational risk, complementing traditional property, liability, and marine lines.
The survey also outlines business expectations of government support. The most frequently cited needs were working capital assistance (41%) and help with managing logistics costs (35%). Among measures announced in Parliament on April 7, respondents viewed the enhanced Corporate Income Tax rebate as providing the most immediate benefit (60%), followed by the Energy Efficiency Grant (43%) and support to defray cost increases in government projects (31%). From an insurance standpoint, such schemes can influence risk profiles and coverage needs. For instance, incentives tied to energy efficiency may accelerate upgrades to plant and equipment, altering property and business interruption exposures. Working capital support may affect corporate solvency trajectories and shape demand for trade credit and surety solutions.
The SBF snapshot sits alongside a more pessimistic global insolvency outlook linked to the Iran war, as outlined in a recent update from trade credit insurer Allianz Trade. The firm now projects that worldwide business failures will rise 6% in 2026, marking a fifth consecutive annual increase, before stabilising at a higher level in 2027. It estimates that the conflict will add more than 15,000 insolvencies over 2026 and 2027 compared with its previous baseline, with Asia expected to account for more than half of the additional cases.
Allianz Trade attributes the revised outlook in part to US-Israel military operations against Iran, Iranian missile retaliation, and the temporary closure of the Strait of Hormuz, which disrupted oil and liquefied natural gas flows and contributed to volatility in shipping and energy markets. Those developments have fed through into higher and more variable energy and freight costs, similar to the pressures reported by Singapore firms in the SBF poll.
For Singapore-based insurers, the combination of SBF’s findings and Allianz Trade’s projections points to a shifting risk landscape. While Allianz Trade’s baseline scenario anticipates some easing in Singapore’s insolvency trend, SBF’s survey indicates that many local firms, particularly SMEs, are already under significant cost and demand strain. In this context, insurance professionals may reassess credit and counterparty criteria, adjust sectoral appetites, and review how risk and liquidity considerations are incorporated into client discussions, especially in sectors that are highly sensitive to energy prices, logistics disruptions and external demand.
